Each crisis tends to accelerate deeply-rooted negative trends impacting the economy. For more than four decades the neoliberal model of capitalism and related economic policy platform have been wrongheaded and dangerous. When the economy cannot escape from hibernation, reflation dominates. Quantitative easing and postponed tapering cause near-term inflation bets to surge. Yield inflation and cost inflation are much higher than CPI and core inflation.
Economists don’t have to accept such outcomes. Only the Great Reset could resolve structural imbalances from the past and bring positive outcomes in the future. Definitely, services are not part of the solution during and after pandemic. Global leaders in finance industry in 2020 cut office space by a third and closed half of branches. Moreover, the dilemma what to expect in the post-COVID-19 period when it comes to the workforce (back to work, hybrid work, or any) still remains unresolved. New industrialization based in the Industry 4.0 solutions is the only way of recovery.
Some sceptics might say it is not the time to run the economy, it is time to play political games. In a small and impotent economy such as Serbia’s economy, catalytic role of the state in the Great Reset is imminent. With regard to this issue, the divide between the haves and havenots is visible. The Serbia’s government forecasts 6% growth for 2021. This forecast comes as a result of very strong momentum of -1% growth in 2020, which is very encouraging data point in the context of pandemic. With this edition of Ekonomika preduzeća we have launched big (and feasible) ideas for the Great Reset in the case of Serbia. The key ingredient in an emerging heterodox approach is a balance between the “visible hand” of state and the “invisible hand” of market. Because the heterodox approach treats core policies in a structural way, we give priority in analysis to industrial or structural policies.
In the first Introductory Paper, a duo of authors, D. Đuričin and I. Vuksanović Herceg, presented three big ideas to make the Great Reset happen in Serbia based on heterodox approach (in-house development of ICT components of intelligent production systems and products, implementation of net-zero carbon technologies, and creation of manufacturing and service hub for health care providers). In the second Introductory Paper, the governor of the NBS J. Tabaković, explained how Serbia entered the COVID-19 crisis, based on a long series of macroeconomic data, and what measures the NBS has taken in coordination with the Treasury to mitigate the last crisis.
In the second part of this edition the focus consistently alternates between structural and core policies. We have started with structural perspective. A duo of authors, B. Paunović and Z. Aničić, discussed the impact of the pandemic on innovations and SMEs. In core policies segment M. Labus dealt with former recession episodes in Serbia covering the period 2006-2020 with the aim of comparing macroeconomic indicators in the related period with the COVID-19 period, as well as DSGE model which was updated. In micro segment, a trio of authors, M. Arandarenko, D. Aleksić and D. Lončar discussed the impact of direct investments on labor market. In macro segment, D. Vujović confronted the standard IMF conceptual platform and policy response in times of crisis with new approaches taking into account negative external effects, public goods, sustainable development goals and related issues. S. Ranđelović discussed three key forces in the COVID-19 crisis driving derailment of the economy from sustainable path, fiscal policy response, non-medical measures and the economy structure. The group of authors from FEFA under the leadership of N. Savić, apart from unconventional core economic policies, reaffirmed the role of industrial policy as the highest goal for recovery, this time by using cluster approach. V. Kostić addressed the issue related to the fight in talent management between domestic and foreign ICT companies, from fiscal perspective. Finally, the group of authors under the leadership of J. Antanasijević pointed out untapped export opportunities in post pandemic period.